BOJ Sparks Dramatic Turnaround in Nikkei

The unprecedented moves by the Bank of Japan on Thursday to end years of deflation brought about a breath-taking turnaround in Japanese stock markets that saw the Nikkei 225 closing up 2.2 percent by the end of the day, at four and a half year highs.

The benchmark index finished at 12,634, unwinding earlier losses of up to 1.7 percent, after the central bank shocked markets with a radical overhaul of its policymaking by adopting monetary base as its policy target, rather than the overnight call rate.

Stocks soared after the yen weakened nearly 2 percent to 95.20 against the the dollar on the news.

(Read More: Bank of Japan Unveils Aggressive Monetary Policy )

Concerns that dissent between BOJ leaders would impinge stimulus action had sent Japanese shares down prior to the announcement.

The biggest gainers included Chugai Pharmaceutical which jumped 9.4 percent and Sumitomo, which climbed 10.3 percent.

"This is a muscular aggressive BOJ the market have been looking for. I don't think its a major surprise given that they now have this 2 percent inflation target, given that they do now have a new governor, new deputies. I think this was very much what was expected and I think it is welcomed by the markets, both equities and fixed income alike," said James Ashley, senior economist at RBC Capital Markets.

Meanwhile South Korea's Kospi closed down 1.2 percent as investors were unsettled by tensions in North Korea.

(Read More: Brace for More Market Tremors From North Korea )

Financial markets in China and Hong Kong are shut on Thursday for a public holiday. Hong Kong will resume trade Friday while the mainland will re-open Monday.

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Kospi Closes Over 1% Down

Further sabre-rattling from Pyongyang added pressure to South Korean shares after North Korean state news agency KCNA carried a statement saying the army had final approval to launch "merciless" military strikes against the United States.

However, one analyst told CNBC that the possibility of war isn't likely. "If you take North Korea's number one strategic objective, regime survival, that indicates it won't really go into a full out conventional war against the U.S," said Michael Raska, Research Fellow at Nantung Technological University.

Automakers dragged on the index as Hyundai Motor fell over 5 percent and Kia Motors tanked 3.2 percent after regulators said both firms would recall over 1.8 million vehicles in the U.S.

Sydney Closes 0.9% Down

A plunge in copper prices led to a sell-off in Australian resource stocks after the base metal hit an 8 month low, leading the index to close 0.9 percent down on Thursday.

Markets were unable to gain traction from upbeat retail sales for February, which rose over 1 percent from the previous month. The news did lift the Australian dollar however, as it rose 0.1 percent against the greenback.

The strong figures seem to demonstrate that the Reserve Bank of Australia's decision to cut rates is gaining traction in the economy.